Chinese brands are piling into S-E Asia and expanding rapidly in sectors from food to electric vehicles

Business Times

18-07-2025

[SINGAPORE] BYD, Chagee, Luckin Coffee – many Chinese brands are flooding South-east Asian markets and turning into names the average consumer in Singapore is familiar with.
These Chinese brands are expanding rapidly in the region, said a Euromonitor report released this week.
South-east Asia is the largest and fastest-growing export destination for Chinese goods, with imports hitting US$587 billion in 2024 – a 12 per cent year-on-year increase, said the report.
Various Chinese brands, in particular, have emerged as key drivers of growth in South-east Asian markets, in sectors ranging from food services to the beauty industry.
'Chinese brands are rapidly expanding across South-east Asia, driven by domestic economic pressures and regional opportunities,' the report said.
'This expansion reflects China's shifting economic landscape, where a struggling property sector, slowing domestic consumption and demographic challenges have pushed companies to seek growth abroad,' it added.
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Euromonitor noted that the Asean-6 countries – Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam – represent 95 per cent of South-east Asia's US$4 trillion gross domestic product, offering 'compelling opportunities'.
'As barriers rise in Western markets, especially the unpredictable US trade policy, and China continues to de-risk from the US, South-east Asia has become both a key export destination and a strategic counterbalance,' the report said.
In which sectors are they dominating in the region? It is where they hold competitive advantages, such as electric vehicles (EVs), electronics and appliances, the report said.
But they are also expanding into new frontiers: that of tea beverages, beauty and pet food.
Food and beverage
South-east Asia's specialist coffee and tea shop market was valued at US$4.7 billion in 2024, with a projected 9 per cent annual growth rate through 2029.
Chinese players, in particular, have been at the forefront of this expansion, where Mixue and Chagee increased their outlets by 80 per cent across South-east Asia between 2019 and 2024.
These Chinese coffee and tea chains have witnessed rapid expansion since 2022, with the region's craze for coffee and milk tea attracting a wave of international and local brands since 2010.
In recent times, Chinese consumer food services players have upped the aggressiveness of their business strategy with rapid outlet expansion, competitive pricing, discount coupons and mobile ordering.
For example, Luckin Coffee, which launched in China in 2017 and now operates over 20,000 stores there, entered Singapore in March 2023 and has already surpassed 50 outlets. Most of them are concentrated in the southern Central Business District (CBD), catering to office workers.
Similarly, bubble tea chain Chagee, which re-entered Singapore in late 2024, has also clustered its stores in the CBD, noted the report.
The stores of many of these coffee and tea chains have asset-light store formats, which look like small outlets with limited seating, prioritising mobile-order takeaway.
'This lean model keeps operational costs low while enabling aggressive growth, boosting brand visibility and accessibility in new markets,' said the white paper.
With regard to competitive pricing models, Luckin Coffee's strategy is a clear example, with the chain offering significantly lower price points, often through promotional pricing and bulk discounts. Customers purchase their beverages only through their app, reinforcing digital convenience as part of the value proposition.
Upon the brand's launch in Malaysia in January 2025, it introduced its latte at a promotional price of RM2.90 (S$0.88), a dramatic markdown from its regular RM13, to attract a consumer base quickly and gain market share. Yet, its pricing is still about 20 to 30 per cent higher than local competitors such as ZUS and Gigi Coffee.
'This reflects a deliberate strategy to emphasise quality and premium ingredients, allowing Chinese brands to justify a higher price point while remaining more affordable than international incumbents,' noted the report published on Thursday (Jul 17).
Electronics and appliances
Chinese brands have long dominated industries requiring minimal localisation, such as in electronics, appliances and EVs.
The smartphone market in South-east Asia exemplifies this trend, where Chinese players have surged to more than 60 per cent in market share, from 21 per cent in 2014.
Such success has extended to other appliances markets, too. For instance, in the air-conditioning category, between 2015 and 2024, Chinese brands grew from 9 per cent to 25 per cent. This is in contrast to Japanese companies losing 7 per cent market share.
Beauty and personal care
As for Chinese beauty brands, they also leverage affordable pricing and digital-savvy strategies to challenge competitors in the region. Chinese brands recorded a compound annual growth rate of 115 per cent in the South-east Asian mass skincare market between 2019 and 2024.
The report noted that Chinese companies such as Guangzhou Feimei (owner of Skintific), Hebe Beauty and Guangzhou Jizhi Trading (parent company of Focallure) have already gained significant market share – largely by dominating digital marketplaces such as Shopee, Lazada and TikTok. These brands succeed by delivering high perceived value at affordable prices, making them highly competitive in their segment.
A key factor that sets today's Chinese brands apart is their strategic localisation. Companies such as Chinese-owned Focallure and Skintific, for example, are set up as local South-east Asia brands, thereby embedding themselves in regional markets through local subsidiaries, tailored offerings, and investments in regional talent and infrastructure.
'This approach blurs the line between foreign and home-grown brands, accelerating consumer acceptance,' said the white paper.
Market penetration for Chinese brands, however, remains uneven across industries. While electronics and EVs enjoy dominant positions, other sectors are still scaling, influenced by variables such as corporate investment priorities, evolving consumer acceptance and local market dynamics, added the report.
'The premium beauty sector, for example, has seen less disruption as consumers still prefer well-established global brands with strong trust and recognition.'
Growing resistance from other Asean nations
China has invested increasingly in South-east Asia to leverage the Asean Free Trade Area, benefiting from lower tariffs, competitive labour costs and improved infrastructure. Therefore, over the past decade, Chinese foreign direct investment in the South-east Asian region has surged, particularly after the US-China trade war.
Chinese investments in Asean's wholesale and retail sectors, for instance, surged by over 700 per cent in 2017, followed by a manufacturing boom in 2019.
That said, the surge in Chinese imports in recent times may not be the best sign for local Asean players, and has since prompted some regulatory reaction from South-east Asian countries.
Thailand's manufacturing output, for one, continues to decrease, and Indonesia's textile sector lost 80,000 jobs in 2024, with 280,000 more at risk this year.
Industrial production in Asean's top economies, excluding Singapore, has stayed flat since 2022. This, the report said, is a potential threat to middle-class stability.
The countries in South-east Asia are not staying put amid intense Chinese competition. Malaysia introduced a 10 per cent tax on low-value imports, and Indonesia has tightened controls on social media-based commerce.
Meanwhile, TikTok's tie-up with Indonesia's Tokopedia also shows how Chinese companies are adapting through partnerships and localisation.